Queuing for retiring savings out of Northern Rock bank

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This topic contains 55 replies, has 16 voices, and was last updated by Profile photo of Anonymous Anonymous 9 years, 2 months ago.

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  • #53148
    Profile photo of Anonymous
    Anonymous
    Participant

    Thousands of british are trying to retire their savings out of Northern Rock Bank:

    http://www.invertia.com/empresas/noticias/noticia.asp?idDoc=1815199

    If the panic starts we can see something similar to the “corralito” in Argentina.

    What can be the solution for this type of panic? Lying more?

  • #75018
    Profile photo of katy
    katy
    Spectator

    Seen shots of the big queues in Kingston-on- Thames 🙁 Just like in the USA in the the last century…a run on the banks. Everything we thought safe now isn’t, pensions and now banks! I do think there is some protection for your savings though (90%)?? Better protection than you get from a dodgy off-plan developer 🙂

  • #75019
    Profile photo of Anonymous
    Anonymous
    Participant

    Chancellor Alistair Darling said this morning on BBC World News that he and the Bank of England made this decision simply because Britain has a very strong economy and by doing this (helping Northern Rock) they will keep it that way, or words to that effect.

    But how far will they go when the next mortgage lender flounders, remembering that earlier this week both Darling and Bank of England governor Mervyn King emphasised that there should be no bail outs for banks?

    For time like this think Gran had the best idea – kept all under the mattress.

  • #75020
    Profile photo of Anonymous
    Anonymous
    Participant

    There is a deposit protection scheme run by the Bank of England. A few years ago a deposit holder was covered upto £ 20,000 per account. The amount now may have incresed.

    One should not forget that the National/State Bank of any Country is its lender of the last resort.

    In the modren advance economies under the mattress is not the right policy but it for the indivual feels happy with it and can sleep at night than that is fine.

  • #75021
    Profile photo of Anonymous
    Anonymous
    Participant

    Shakeel – Gran felt happy with it. All the time she was sleeping on it, Granddad couldn’t nick any to pop down the pub.

  • #75022
    Profile photo of katy
    katy
    Spectator

    Apparantly Germany had to step in to prop up two German banks in August. Heard on news that the problem with Northern Rock was that they did not want to lend money due to the crisis in the USA. Now of course they have the problem of loss of confidence and everyone wanting their money. TV said that someone from NatWest was going around the Northern Rock queue touting for business 🙄

  • #75028
    Profile photo of Anonymous
    Anonymous
    Participant

    Can I please just throw in my two bit, as I’ve been jumping up and down about this all day.
    Once again we have seen the UK media, papers particularly, create a spin and tell a story that is so far from the truth and has really caused the scenes we have seen today. And listening to the numptys who are desperate to get their money out, they are the sort of people who really do believe everything they read!

    Northern Rock is not strapped for cash, if everyone took their money out tomorrow they would still have enough of an asset base to pay all the bills, keep trading and would actually make more profit. Currently, today…yes right now……they have a net asset base of over £100billion. Yes you read that correct, £100billion.

    Here’s what really happened…………………

    They have had to re finance some commercial paper that was due first week of this month. (Commercial paper is a debt instrument used by companies to raise money.) The CP market right now is crap, don’t care who you are these deals are not getting done. So, as all the UK banks have stopped lending to each other right now (because CP markets are tight) they approached the BofE for a short term loan.
    Here’s the BoE statement………..

    The Chancellor of the Exchequer has today authorised the Bank of England to provide a liquidity support facility to Northern Rock against appropriate collateral and at an interest rate premium. This liquidity facility will be available to help Northern Rock to fund its operations during the current period of turbulence in financial markets while Northern Rock works to secure an orderly resolution to its current liquidity problems.

    Note the word ‘collateral’.

    So, what we have is the BofE lending against an asset at market rates short term. Not even close to what these muppets in the press will report.
    It is worth noting that the BofE will not bail out a bank, they will close it and pay back depositors. They will however, organise these short term loans.

    Maybe not as sensationalized, or dramatic for the press…….but hey, when have they ever let the truth stand in the way of a good story.
    This site on the other hand seeks to expose the truth…….so there you have it.

    P.S. For any of you punters out there, load up on Northerns stock. This time next year you will have done very nicely. And in the interests of disclosure, yes today I bought and yes they went down a bit, but I really don’t care.

  • #75029
    Profile photo of katy
    katy
    Spectator

    Sounds about right 🙂 Good overview Made in Marbella. Good to get the truth aside from the lying newspapers.

  • #75030
    Profile photo of Anonymous
    Anonymous
    Participant

    madeinmarbella:
    Yes, the crises bring opportunity. At one stage the share value was down by 26%. If only I had the cash I would have been in there with you in buying the stocks.

    I am sure that Northern Rock will come out strong in the not too distance future

  • #75031
    Profile photo of Anonymous
    Anonymous
    Participant

    Charlie: not only the pub but the betting shop befor and after the pub.

  • #75040
    Profile photo of mike
    mike
    Participant

    @madeinmarbella wrote:

    Can I please just throw in my two bit, as I’ve been jumping up and down about this all day.

    Once again we have seen the UK media, papers particularly, create a spin and tell a story that is so far from the truth and has really caused the scenes we have seen today. And listening to the numptys who are desperate to get their money out, they are the sort of people who really do believe everything they read!

    Well, I understand your frustration with some of the press but can you really blame anyone whose dreams are held in a Northern Rock account for overreacting.

    I have a couple of questions. I’m not trying to be a smart ass so don’t have a go.

    @madeinmarbella wrote:

    Northern Rock is not strapped for cash, if everyone took their money out tomorrow they would still have enough of an asset base to pay all the bills, keep trading and would actually make more profit. Currently, today…yes right now……they have a net asset base of over £100billion. Yes you read that correct, £100billion.

    But isn’t their asset base largely in loans to customers to buy property?

    @madeinmarbella wrote:

    Here’s what really happened…………………

    They have had to re finance some commercial paper that was due first week of this month. (Commercial paper is a debt instrument used by companies to raise money.) The CP market right now is crap, don’t care who you are these deals are not getting done. So, as all the UK banks have stopped lending to each other right now (because CP markets are tight) they approached the BofE for a short term loan.

    And aren’t these CP markets tight because there are fears about the loans that banks have made for people to buy property?

    @madeinmarbella wrote:

    Here’s the BoE statement………..

    The Chancellor of the Exchequer has today authorised the Bank of England to provide a liquidity support facility to Northern Rock against appropriate collateral and at an interest rate premium. This liquidity facility will be available to help Northern Rock to fund its operations during the current period of turbulence in financial markets while Northern Rock works to secure an orderly resolution to its current liquidity problems.

    Note the word ‘collateral’.

    The collateral is property? As in Collaterised Debt Obligations? The government is buying them because the market won’t touch them?

    @madeinmarbella wrote:

    So, what we have is the BofE lending against an asset at market rates short term. Not even close to what these muppets in the press will report.
    It is worth noting that the BofE will not bail out a bank, they will close it and pay back depositors. They will however, organise these short term loans.

    But NR are paying more than they normally would to get these loans and it will affect their profit margins. If money markets don’t believe that banks have been prudent when lending money to buy property then they may lend at some point in the future but they will require a greater premium. This will further affect NR profits

    @madeinmarbella wrote:

    Maybe not as sensationalized, or dramatic for the press…….but hey, when have they ever let the truth stand in the way of a good story.
    This site on the other hand seeks to expose the truth…….so there you have it.

    Well, yes. Hard to disagree sometimes.

    @madeinmarbella wrote:

    P.S. For any of you punters out there, load up on Northerns stock. This time next year you will have done very nicely. And in the interests of disclosure, yes today I bought and yes they went down a bit, but I really don’t care.

    I’ll let you get rich on the back of this one. I’ll have a nice cup of tea and watch from the sidelines.

  • #75049
    Profile photo of Anonymous
    Anonymous
    Participant

    But isn’t their asset base largely in loans to customers to buy property?

    yes it is, with very little sub prime and “quality loans” if you are to believe the electronic media today.

    The collateral is property? As in Collaterised Debt Obligations? The government is buying them because the market won’t touch them?

    I think it’s nervousness in the market, and The Bank clearly will touch them.

    But NR are paying more than they normally would to get these loans and it will affect their profit margins. If money markets don’t believe that banks have been prudent when lending money to buy property then they may lend at some point in the future but they will require a greater premium. This will further affect NR profits

    Effect the profit margin yes (i would suggest short term), profits projected this morning at £500M, and you are assuming they take up the loan which they haven’t yet.

    I’ll let you get rich on the back of this one. I’ll have a nice cup of tea and watch from the sidelines.

    Well now there is talk of a take over with the share price so low, so he just might get rich (well richer)

    Regards

    Paul

  • #75050
    Profile photo of mike
    mike
    Participant

    @p800aul wrote:

    Well now there is talk of a take over with the share price so low, so he just might get rich (well richer)

    Regards

    Paul

    According to Bloomsberg a brave investor might be tempted at this price so he may not get quite so rich.

    Personally, I have money deposited in banks, that’s enough risk for the moment

  • #75051
    Profile photo of Anonymous
    Anonymous
    Participant

    Shakeel mentioned a sum of £20,000 as being protected if the bank went ‘belly up’. I’ve always been told, for a number of years, that only the first £15,000 is guaranteed and I am almost 100% sure that that is still the level today.

    Hope all are well,

  • #75052
    Profile photo of rt21
    rt21
    Participant

    Compensation is limited to a maximum of £31,700 per person. For the first £2,000 you have in savings you will receive 100% of your money back; for the next £33,000 you get 90%. On savings above that level you get nothing.

    Richard

  • #75053
    Profile photo of Anonymous
    Anonymous
    Participant

    At least rt21 and Mike appear to have the correct background information. madeinmarbella, what the hell have you been taking. 100B assests, but not after overvaluatios, still, that is just a minor point.
    I have some money with them which OK, I stand to loose if every idiot queues to withdraw.
    The attraction to NR for investors was the interest rates offered and if you invest, it can always be a risk.

  • #75054
    Profile photo of Anonymous
    Anonymous
    Participant

    MG

    How dare you call the people and that includes me that have withdrawn their money, Idiots. What ever reassurrance people are given and what ever are the true financial position of NR is People are protecting their life savings, pension money and dreams.

    I think NR is now finished as a savings institution, who in there right mind would now actually depoist money with them.

    In my opinion there is only one idiot on this thred.

  • #75055
    Profile photo of Anonymous
    Anonymous
    Participant

    Please, stay calm.

    I have always admired british politeness. We dont have to insult even arguing with others.

  • #75056
    Profile photo of Anonymous
    Anonymous
    Participant

    Let’s all withdraw from NR, worsen matter, BoE bail out and interest rates rocket.
    I suppose we could all withdraw our cash, stash it under the bed and when stolen, expect sympathy?

    I think someone must be red in the face and fingers working faster than brain:
    “thred”!!! “who in there right mind” – him out there.

    “I think NR is now finished as a savings institution” Until taken over and re-branded that is.

    Please note, any investment can be a risk.

  • #75057
    Profile photo of Anonymous
    Anonymous
    Participant

    MG

    Your disjointed post in reply to mine says it all, you clearly do not have any understanding whatsoever of what people regard as a real threat to there life savings, and of course it goes without saying that if NR is taken over the savings product of the buisiness will remain intact.

    THIS IS NOT AN INVESTMANT PRODUCT WITH RISK ATTACHED, IT IS A SOLID SAFE BRITISH BANK ACCOUNT.

  • #75058
    Profile photo of Anonymous
    Anonymous
    Participant

    rt21.
    You are indeed correct and I have since made inquries. As I said in my posting that I was not sure of the latest amount covered by the deposit protection.

    The reason that I posted was for people who were not aware of the underwriting by the BOE and for some comfort for people with smaller amounts invested.

    NR, may get taken over and re branded the risk associated with financial institutions will always be there. If a depsitors wants to be 100% safe then they should think of Gilt edge schemes. Naturaly the rates offered will be much lower.

    After a while the NR saga will be forgotten like Johnson Matthey, BCCI, Barings, Equitable life Henry.

  • #75059
    Profile photo of Anonymous
    Anonymous
    Participant
    shakeel wrote:
    rt21.

    After a while the NR saga will be forgotten like Johnson Matthey, BCCI, Barings, Equitable life Henry.

    I totally disagree, NR is the first among many to come. Every bany who offered 125% mortgages and 6-7 times mortgages in order to pump up the bubble deserves to be punished.

  • #75060
    Profile photo of Anonymous
    Anonymous
    Participant

    Now that I seem to have stirred the pot a little, let me just outline some further factual information. I do confess a small head start on most, as this is type of stuff pays my wages…………

    Here is a line from a conference call the CEO had with analysts on Friday;

    “We have not used the facility – this is a backstop in case we need to use it.”

    The overall message was that Northern Rock recognised that markets have changed radically and they are hunkering down after taking the view that they don’t know when conditions might improve. They are refusing to write unprofitable business and are effectively in run-off until the market clears.
    Chancellor Alistair Darling, the Bank of England, HM Treasury, the Treasury Select Committee, the Financial Services Authority (FSA), the Council of Mortgage Lenders and the British Bankers’ Association have all lined up to confirm that Northern Rock is in no danger of going bust. They have around £113 billion of loans and assets and £24 billion of deposits (ok, so maybe £23 billion today).

    Now let me explain why Northern Rock are slightly different to most banks. For those paying attention so far, there’s a massive clue in the numbers above.
    Around 70% of the Company’s funding is derived from wholesale markets (Commercial Paper). To compare, some averages across Europe are France 50%, Germany 66%, Italy 50%, Spain 49% and the UK 45%.
    Now we can see that the business model currently employed by the bank relies on an inflow of funds from the debt markets, which are currently very illiquid. Hence they have sought funding elsewhere, but have yet to use it.

    A previous poster made a reference re the Company’s asset base. Unfortunately this is a common misconception as banks assets are not the same as a normal companies. So, mg……..pay attention at the back of the class!!!! 😀

    For a bank, a customer deposit is a liability, not an asset. That’s because the bank has to pay it back on demand to the depositor.
    Loans to customers are assets, because the customers are meant to pay the loan back over a fairly long period of time.
    Neither of these are capital. Capital is risk money that cannot be demanded back by shareholders. It’s roughly the difference between the assets and liabilities above. Or the money raised from selling shares plus retained profits, an alternative view.
    So depositors withdrawing funds will not affect capital.

    Northern’s loan book is currently around 91% secured first home, 7% buy to let secured and 2% un-secured. Let’s assume house prices in the UK crash 25% next week. How will that affect business? It won’t, as they don’t value the business on property, only on loan value. If, and its a big if, a massive % default then yes cash flow would be hit and they would have to call on the BofE loan. Lets us not forget they have around £3billion in cash at any one time (that may be £2billion on Monday). And the depositors? Well, if all the money had been withdrawn, all £20 billion odd, then the BofE loan would be called on. Who suffers? Shareholders only. (Common theme here, BofE steps in…. 😀 )

    I’m sure many here recall the Barings Bank default from some years ago. They went bust for about £800 million and all those people lost money. All those shareholders, not depositors. Depositors were compensated in full by the BofE. So whilst there is a limit under the Investors Compensation Scheme of £33,000 (£2k at 100% and the rest at 90% to a maximum of £33k) the BofE would ensure that depositors never lost out. In practice the bank would be sold for a nominal sum to another bank and deposits moved over.

    Hope that clears up some confusion. Of course the newspapers would never explain these simple facts and I am still of the opinion that these people queuing for money are daft (strange how they nearly all seem to be advanced in years, are the younger ones using the Net, or is this the entire readership of the Daily Mail one wonders?) as they really haven’t listened to the facts, just the rhetoric.

    And Stevev6……..hope this helps answer some of the questions you must have had today. You must remember though that money in the bank is an investment and does carry risk. There is only one bank in the UK that is not considered an investment and carries zero risk for depositors, and that is the BofE. Yup, the boys behind Northern currently 😀
    Personally I think if you have moved your money to a higher paying account you have done well, if not then you need not have bothered with it all. The chances of you loosing you money are as good as Marbella town hall handing out refunds to defrauded house buyers.

  • #75061
    Profile photo of Anonymous
    Anonymous
    Participant

    [

    madeinmarbella wrote:
    Now that I seem to have stirred the pot a little,
    Hope that clears up some confusion. Of course the newspapers would never explain these simple facts and I am still of the opinion that these people queuing for money are daft (strange how they nearly all seem to be advanced in years, are the younger ones using the Net, or is this the entire readership of the Daily Mail one wonders?) as they really haven’t listened to the facts, just the rhetoric.
    .

    Wake up my man. The situation at NR is as blue as it gets…

    http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2459583.ece

    Just a small paragraph: “Even if the turmoil in the credit markets eases, analysts believe that Northern Rock is unlikely to remain independent. “The simple answer is that the bank has been damaged. Its model of relying on the wholesale markets needs to be radically altered. A strategic partnership or a takeover are the only realistic options,” said one.”

    This says everything one needs to know at this monent.

  • #75063
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Madeinmarbella

    Thanks for taking the time to post what can only be described as the definitive answer to all the questions regarding NR, however I feel this will cut no ice with either the flat caps of the north or the city slickers from down south.

    It will be intresting to see what happens over the next week, I hope you are right for the sake of the people that have not moved their money or the ones that can’t for whatever reason.

    It would appear that I was sucessfull in withdrawing my cash yesterday after hours on the internet,but MM you are right not nearly as much intrest

    SteveV

  • #75065
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi to you all

    As the regulars will know we returned from Spain last week after yet another property search.

    Guess what!

    We found it, made an offer,been accepted, YIPPEE

    We got home straight into the NR crisis.

    If we get our money back tomorrow I will share the dream, if not I will be jumping off the nearest bridge.

    Steve

  • #75066
    Profile photo of Anonymous
    Anonymous
    Participant

    Very happy for you Steve & hope all goes o.k. Would love to hear where it is, when you’re ready.

  • #75069
    Profile photo of Anonymous
    Anonymous
    Participant

    madeinmarbella: Your posting is spot on. You will appreciate that not all depositors are aware of liquidity, corsets, short term long term liability etc. It is one of the main reasons that a large percentage of people leave their money on deposit.

    There is nothing wrong in leaving surplus cash in a Bank depsit account. One might do it as nest egg or a short term home for their money. The truth is that that the rates that are being offered by Banks are low and once the notional tax is taken into account, a depositor will be lucky to just about match the prevailing rate of inflation.

  • #75070
    Profile photo of Anonymous
    Anonymous
    Participant

    Interestingly enough Barclays had to use a bank of england loan a few weeks ago. Not sure of the exact amount but the reason given was for administrative oversight, ie banks have to reconcile every day and for whatever reason they couldn’t so had to borrow from the other banks, who couldnt or wouldn’t so they got the loan from BOE.

    Yet I don’t hear of thousands queuing outside Barclays or Woolwich branches wanting their money

    Why is that?

    I also believe it is fairly common practise (though not being in banking could not say for definite) and whilst the bank of England is a last resort funding, it is used fairly often

    Yet no other bank seems to feel a backlash from the press.

    So just why is it then that Northern Rock have (unfairly in my opinion) been castigated so by the press

  • #75073
    Profile photo of mike
    mike
    Participant

    @madeinmarbella wrote:

    Here is a line from a conference call the CEO had with analysts on Friday;

    “We have not used the facility – this is a backstop in case we need to use it.”

    He must have realised that simply asking for this loan would have provoked a reaction. He seems rather naive.

    @madeinmarbella wrote:

    The overall message was that Northern Rock recognised that markets have changed radically and they are hunkering down after taking the view that they don’t know when conditions might improve. They are refusing to write unprofitable business and are effectively in run-off until the market clears.

    You mean they will not write any new loans because the sums don’t add up any more? That’s serious

    @madeinmarbella wrote:

    Chancellor Alistair Darling, the Bank of England, HM Treasury, the Treasury Select Committee, the Financial Services Authority (FSA), the Council of Mortgage Lenders and the British Bankers’ Association have all lined up to confirm that Northern Rock is in no danger of going bust. They have around £113 billion of loans and assets and £24 billion of deposits (ok, so maybe £23 billion today).

    Have they looked through the books? Or have they simply been reassured by the CEO?

    @madeinmarbella wrote:

    Now we can see that the business model currently employed by the bank relies on an inflow of funds from the debt markets, which are currently very illiquid. Hence they have sought funding elsewhere, but have yet to use it.

    Their business model won’t work going forward, I would say. What they need to do is get more savers and that’s not happening ever since they asked for access to that loan

    @madeinmarbella wrote:

    Capital is risk money that cannot be demanded back by shareholders. It’s roughly the difference between the assets and liabilities above. Or the money raised from selling shares plus retained profits, an alternative view.
    So depositors withdrawing funds will not affect capital.

    Capital as you describe seems to be retained profit. Is that correct? Profits that have been made in previous years. I don’t think they will continue to make the same profits, money has become far more expensive, especially to a bank with relatively few savers.

    @madeinmarbella wrote:

    Northern’s loan book is currently around 91% secured first home, 7% buy to let secured and 2% un-secured. Let’s assume house prices in the UK crash 25% next week. How will that affect business? It won’t, as they don’t value the business on property, only on loan value. If, and its a big if, a massive % default then yes cash flow would be hit and they would have to call on the BofE loan. Lets us not forget they have around £3billion in cash at any one time (that may be £2billion on Monday). And the depositors? Well, if all the money had been withdrawn, all £20 billion odd, then the BofE loan would be called on. Who suffers? Shareholders only. (Common theme here, BofE steps in…. 😀 )

    The BoE will only help them through a liquidity crisis. The rate of interest that NR will have to pay in future, given that they have relatively few savers, will be higher and it might make all their current loans unprofitable, i.e. they pay more for money than they receive in interest payments. Then the BoE will consider them insolvent and the money stops.

    @madeinmarbella wrote:

    I’m sure many here recall the Barings Bank default from some years ago. They went bust for about £800 million and all those people lost money. All those shareholders, not depositors. Depositors were compensated in full by the BofE. So whilst there is a limit under the Investors Compensation Scheme of £33,000 (£2k at 100% and the rest at 90% to a maximum of £33k) the BofE would ensure that depositors never lost out. In practice the bank would be sold for a nominal sum to another bank and deposits moved over.

    I thought another bank bought Barings but I can’t remember the full story so bow to your greater knowledge. I hope the government doesn’t bail out the depositors, it would cost them 20 billion and what happens if another bank goes bust? At the end of the day the tax payer picks up the bill and they either raise the money through tax or through cuts and the economy suffers even more.

    @madeinmarbella wrote:

    Hope that clears up some confusion. Of course the newspapers would never explain these simple facts and I am still of the opinion that these people queuing for money are daft (strange how they nearly all seem to be advanced in years, are the younger ones using the Net, or is this the entire readership of the Daily Mail one wonders?) as they really haven’t listened to the facts, just the rhetoric.

    I’m not sure you are presenting facts. It feels like opinion and an attempt to calm people down and if this is your day job then your description of risk capital was a bit of a red herring, wasn’t it?

    Personally, if I had money in NR I would be trying to switch it to another bank by internet over the weekend, hoping that the website is less busy.

    @madeinmarbella wrote:

    And Stevev6……..hope this helps answer some of the questions you must have had today. You must remember though that money in the bank is an investment and does carry risk. There is only one bank in the UK that is not considered an investment and carries zero risk for depositors, and that is the BofE. Yup, the boys behind Northern currently 😀

    I hope Steve doesn’t lose any money but I also hope that the BoE does not stand behind a bank which is insolvent, it would set a nasty precedent which I think is known as “moral hazard”

    @madeinmarbella wrote:

    Personally I think if you have moved your money to a higher paying account you have done well, if not then you need not have bothered with it all. The chances of you loosing you money are as good as Marbella town hall handing out refunds to defrauded house buyers.

    The trouble with moving to a higher paying account is the worry that the bank paying high interest is doing so to attract savers as they too have a liquidity problem. Spread your money around, less than 30K in each account and don’t buy shares in banks at the moment, just be glad to keep 90% of your dosh.

    Best of luck everybody, they reckon this week will be exciting!! 8)

  • #75074
    Profile photo of katy
    katy
    Spectator

    Gosh, I am impressed! These posters have so much knowledge of finance and banking. I am suprised they aren’t debating this on a finance forum.
    ¡Ojalá! 💡

  • #75082
    Profile photo of Anonymous
    Anonymous
    Participant

    Let’s have a look at the salient facts.

    NR has received funding from the BoE. When it’s liabilites become due over the next few weeks, it will use this funding. If it does not it will go into administration. It is highly misleading to imply that NR has these funds as a precaution, and that it won’t need to use them.

    Northern Rock’s business model has failed. It has been making highly risky bets on future interest rates and has inevitably come unstuck. It has long term liabilities and has been assuming that it could fund them in the short term market for a cheaper rate. Why should that always be the case?

    The price of Northern Rock fell by 30% on Friday. It had already halved on the year to date. This is because the pension and hedgefund managers (the “smart money”) who have billions to invest, don’t want their money in NR. If you bought the share on Friday lunchtime, you would have lost at least 10% of your investment already.

    Madinmarbella endorses buying NR shares. Well, if you are a financial advisor, madinmarbella, then your advice should have a public health warning.
    Asking a financial advisor when is a good time to buy a stock is like asking an estate agent when is a good time to buy a house. Financial advisors are Salesmen and for this reason have vested interests in earning commissions first and foremost.

    It is dangerous to make the assumption that the BoE will cover any more than £31,200 of your savings. This is typical Costa del Sol “don’t worry about it mate”. If the BoE felt confident that it could safeguard 100% of retail customer balances it would make that explicit through law.

    Madinmarbella accuses the newspapers of sensationalism and inaccuracies. I think that his version of events would make the likes of Alistair Campbell smile.

  • #75083
    Profile photo of mike
    mike
    Participant

    @katy wrote:

    Gosh, I am impressed! These posters have so much knowledge of finance and banking. I am suprised they aren’t debating this on a finance forum.
    ¡Ojalá! 💡

    Katy, I am discussing this on a financial board too. Do you want to know what people there think or do you think that another world?

    Some agree with MadeinMarbella and their opinions, as well as his, have moulded my opinion. I can see now how I have been a little too extreme and that the company has value but I don’t understand it 100% and I have money and I want to protect it.

    Thanks, MadeinMarbella, by the way.

    The reason I am discussing it here as well is that it is adding to my education on the folly of people in groups or, as I prefer to call it, the herd. The best people that I can claim to have tried to discuss the market with were, at best, complacent, the majority were stupid. All seemed emotionally involved with their investment decision.

    I like stupid people. They present opportunities. I’d be very interested to know why anyone considers Spanish property a good investment now. With figures of course

  • #75084
    Profile photo of Anonymous
    Anonymous
    Participant

    [quote=”mikeI like stupid people. They present opportunities. I’d be very interested to know why anyone considers Spanish property a good investment now. With figures of course[/quote]

    Well, the stupid and his/her money are soon parted…

  • #75085
    Profile photo of Anonymous
    Anonymous
    Participant

    To put some minds at rest I am not, and have never been, a financial advisor. Interestingly, the majority of IFA’s should not be offering advice on individual stocks as they are not qualified to do so. Stockbrokers are however and in today’s market where one can buy and short product most brokers do not need to ‘sell’ shares. I know some people who have been short in Northern from about £8. Oh, and I’m not a stockbroker either 😆
    Whatever your opinion on the merits of stocks as investments, and sectors or individual stocks, you are entitled to it, as I am mine. Please don’t forget that it takes both a buyer and a seller to make a market, and that market determines the price.
    My original comment was referring to a position I have taken and would benefit me if the price rises at some point, including a takeover. Much like property investment, you pay your money and take a chance.

    Mike…………..you have some interesting points and some areas you have read wrong. Without going into massive depth, after all this is a Spanish property board….a couple of things you need to consider.

    Northern will not stop lending. You have a simplistic view of the loans packages they have, retail and commercial. All that happens is you raise your retail loan rates as money becomes more expensive. They have debt product currently requiring re financing, not because it’s gone bad but because it due for maturity. However, current loan rates will be raised if the cost of money increases, which without going into chapter and verse on it will result in lower overall profits (more customers walk, tighter margins etc etc) and the City have been aware of this for sometime, hence the value of the stock has declined.
    Going forward credit markets will ease and in a few months it will be business as normal, that’s they way of the markets. Media blustering and wheeling out the politicians who haven’t a clue to talk of more rules will not change a thing. It’s called capitalism.

    ING bought some of Barings, but depositors had BofE guarantees on the bits they didn’t buy (I know, as my firm was one of them!!).

    The BofE will not bail out an insolvent bank, and Northern is not insolvent. And yes they look at the books, every day normally. Every bank gets looked at every day one way or another.

    Personally I think Northern will be bought by Barclays, but then that’s just a hunch and I’ve been wrong before…
    😯

  • #75089
    Profile photo of Anonymous
    Anonymous
    Participant

    Well Northern Rock share price is now £3, it’s been as low as £2.87 today.
    That’s from £5 on Friday lunch time and from a high of £11.72 this year.

    Any more stock tips for us madinmarbella?

  • #75090
    Profile photo of Anonymous
    Anonymous
    Participant
    madeinmarbella wrote:
    T
    The BofE will not bail out an insolvent bank, and Northern is not insolvent. And yes they look at the books, every day normally. Every bank gets looked at every day one way or another.

    Personally I think Northern will be bought by Barclays, but then that’s just a hunch and I’ve been wrong before…
    😯

    Cogratulations mr. Marbella, you just lost 40% of what you had on Friday. And NR is still falling.

    Or was it just a glass too many of sangria?

    The bad news is that your house in Spain will also lose 40% of the value in the near future…

  • #75091
    Profile photo of Anonymous
    Anonymous
    Participant

    Northern Rock spreading rumours about Spanish banks?

    http://www.typicallyspanish.com/news/publish/article_12509.shtml

  • #75093
    Profile photo of Anonymous
    Anonymous
    Participant

    Walked past NR in Kingston an hour or so ago, where there are still hundreds of people queuing to get in + T.V. cameras etc. A larger percentage of these people appear to me to be elderly folk. There also seems to be quite a few youngsters hanging around on the corners who should be at school. I really hope the Police are keeping a vigilant eye on the situation, as it is obvious that most people will be carrying cash as they exit.

  • #75095
    Profile photo of Anonymous
    Anonymous
    Participant

    …and possibly to their homes, where they will keep it safe. Just hope they were not followed, or it may have been safer with NR.

  • #75097
    Profile photo of katy
    katy
    Spectator

    It said on TV yesterday that they were being paid out by cheque. All those dire warnings about the spanish banks being in trouble and the UK is the one with problems. Will it domino though? USA has sneezed and once again the UK has caught a cold, will the spanish economy catch a sever cold?

  • #75098
    Profile photo of Anonymous
    Anonymous
    Participant

    BBC

    Northern Rock deposits guaranteed

    The government has said it will guarantee all deposits with the Northern Rock bank.

    http://news.bbc.co.uk/1/hi/business/6999615.stm

  • #75102
    Profile photo of Anonymous
    Anonymous
    Participant

    madeinmarbella, like all investors has taken a view as to at what price he/she should get into the market and I am sure he/she also has a getting out price.

    If all of us know the bottem and top end of the market for any commodity and we act upon it. We all would be extremely wealthy.

    Lets take the Spanish property as an example. Did we know when the property prices have peaked. We took a view on it and this was based on our attitide to risks.

  • #75105
    Profile photo of Anonymous
    Anonymous
    Participant

    Just to add a small update.

    Unlike investing in property (unless you are seriously well off) you have the chance in the market to average down. Just because you bought at one level and the stock drops off doesn’t preclude you from buying in lower down if you feel the investment merits it.
    Hence today, after seeing one trade of 24million shares at a level, I averaged down.
    Who knows what tomorrow will bring, but at the close today I am slightly up, very slightly, and I’m still happy with the position.

    We have now had clarification that HM Gvt will cover all depositors. Whilst knowing this would happen (political suicide not to) I can’t say that I’m happy with it, as a taxpayer, although I would bet that it never really happens. Its a confidence move, rather than a bail out. In reality a buyer will emerge and deposits will move across.

    My point from the first post was to try and install confidence and faith in those that might be reading this with deposits in Northern and now I think with these moves from Gvt that has been done on a national level. Certainly Northern is now the safest place for your money in the whole UK banking system, and will probably earn the most interest.

    On that note, I will retire from this thread and once again go back to keeping myself abreast of developments on the property front from afar.
    Good luck with your campaigns and dont let the bas****s grind you down 😆

  • #75224
    Profile photo of Anonymous
    Anonymous
    Participant

    Still trying to save face madinmarbella?
    The stock you recommended at £5 ended the week below £2. That was a spectatularly bad call.
    & all this happened in a week when the Fed cut rates and virtually every other share rallied. I think it’s a great idea that you retire.
    It was wrong to suggest that a takeover would see a rally in the share price; with NR in such a precarious situation, rival banks will be looking for a bargain basement price -not to pay a premium.
    As for the 100% guarantee -that was a political promise made by Alistair Darling based on the assumption that they would never have to pay out. If the Labour govt found themselves in the position where they might actually have to part with money, the spin machine would go into overtime to reinterpret the guarantee -it is naive to think otherwise.
    You obviously have a little knowledge about the banking system, but your complete misjudgment of the situation goes to prove the saying – “a little knowledge is dangerous”.

  • #75225
    Profile photo of Melosine
    Melosine
    Participant

    BBC tv news this morning said 3 executives of Northern Rock had been ,possibly still are ????? in Marbella congratulating themselves on the incredible number of mortgages they had recently issued !!

  • #75226
    Profile photo of Anonymous
    Anonymous
    Participant
  • #75232
    Profile photo of Anonymous
    Anonymous
    Participant

    I had to return to reply to Forestfire.

    Congratulations, go to the top of the class as you have displayed the classic signs of the true muppet private investor.

    Before getting on your box and crowing, read the entire post. Then read it again. Then, ask someone that understands how to trade markets to explain to you what it means.
    FYI my week in Northern was profitable, as unlike many I do understand cost averaging, trading, shorting and running a position. Funny enough, so did my clients this week and they made money as well.

    As for the rest of your waffle……no further interest.

  • #75234
    Profile photo of Anonymous
    Anonymous
    Participant

    When the going gets tough the goes to the Beach.

  • #75250
    Profile photo of Anonymous
    Anonymous
    Participant

    “Congratulations, go to the top of the class as you have displayed the classic signs of the true muppet private investor.”
    Ouch, that hurts…

    In your first post when Northern Rock was trading at £5 you said that it was a good long term buy.
    Quote “For any of you punters out there, load up on Northerns stock. This time next year you will have done very nicely.”

    Now with Northern Rock trading at below £2, you’re claiming that you’ve used “cost averaging, trading, shorting and running a position” and you have actually made money. Gosh that’s a bit too complicated for me to understand…
    All I can understand is that you said that at £5 Northern Rock was a good long term buy.
    & you now say that you and your clients made money going short the stock -isn’t that the opposite of what you advised the forum to do?

    I believe that your analysis of the situation is as flawed as your recommendation to buy Northern Rock at £5.
    To this ends I have used arguments to expose the flaws in your analysis.
    However, you have not answered a single point of criticism that I have made.
    All I get in response is half an insult and a flippant line.
    “As for the rest of your waffle……no further interest.”

    How about you respond to the argument or retire as promised earlier. Or throw a few more insults if it makes you feel good…

  • #75263
    Profile photo of Anonymous
    Anonymous
    Participant

    There are reports today to suggest that Jose Maria Ruiz Mateos, a Spanish businessman is representing a group of investors interested in buying Northern Rock, large enough to give him control of the company.

    Ruiz Mateos spent several years in Jail in the 1980s; imprisoned on charges of currency smuggling, fraud and tax embezzlement,but was acquitted in 1999. He went on to own a football team & has 13 children ❗ (Is that enough for a team? I know nothing about football.)

  • #75287
    Profile photo of mike
    mike
    Participant

    @Suzanne wrote:

    Ruiz Mateos spent several years in Jail in the 1980s; imprisoned on charges of currency smuggling, fraud and tax embezzlement,but was acquitted in 1999. He went on to own a football team & has 13 children ❗ (Is that enough for a team? I know nothing about football.)

    Does he own another bank? I’ve heard some people say that the Northern Rock brand name is now rubbish and the only way it will survive is if it is bought by another bank and the name ditched. Otherwise, is it possible that he sees X amount of long term assets at X-Y price?

  • #75288
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Mike – article in Financial Times about Mateos:
    http://www.ft.com/cms/s/0/e61fb874-6ba1-11dc-863b-0000779fd2ac.html

  • #75291
    Profile photo of mike
    mike
    Participant

    @Suzanne wrote:

    Hi Mike – article in Financial Times about Mateos:
    http://www.ft.com/cms/s/0/e61fb874-6ba1-11dc-863b-0000779fd2ac.html

    Thanks, Suzanne. I liked these quotes from the article

    “He always wanted to buy a bank. It could be an interesting opportunity,” an aide said.

    At this point in the article I imagined him to be an Abramovich type character, buying something he doesn’t understand on a whim and then I read this piece

    In 1992 he showed up in a Superman outfit at a branch of a local bank to announce his acquisition of Rayo Vallencano, the football club.

    Still, he could put the fun back into banking!! 😆

  • #75292
    Profile photo of Anonymous
    Anonymous
    Participant

    Jose Ruiz Mateos: Is is a colourful character, a showman and an enigma. During Franco period and just after and during the socalist period he was politically target. He was a Robin hood kind of a personality and had wide business interest, was employing a very large number of people at the time when Spain had nearly 30 % unemployment, Franco tolerated him.

    He than became a hate figuire as the Spaniards(envy) did not like people making money. He was brought down by the than socialist government for Tax evasion ( As if he was the only one in Spain ) He use to own a departmental store called ” galaries precidos ” which was bought by British Store house group in the 80’s, visitors to large cities in Spain during the 70s/80s may recal this store. “Galaries precidos”stores were taken over by El Corte ingles. I recall the one in Calle Seranco in Madrid.

    Mr Mateos has done quite a few stunts in his life to draw attention to his position and his treatment by the socalist Governtment at the time. He also stood as an MEP.

    He provided the Spaniards with more entertaiment than TVE, or Spanish film industry. He was unlike late Jesus Jill who uncoath.

  • #75296
    Profile photo of Anonymous
    Anonymous
    Participant

    “He always wanted to buy a bank. It could be an interesting opportunity,” an aide said.
    I always wanted to buy a Spanish property. Shame it’s not worked out 😕

    What a character Mateos sounds.

    Wish I hadn’t read that bit about Superman. It’s given me the strangest ideas. All I need now is a Cat Woman costume, & SPSP could be really cooking.
    Holy Smoke ❗

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